Published by Atlantic Institute for Market Studies

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Are We $67 Billion Healthier than the United Kingdom?

Due to Canada’s geographic location we often compare ourselves to the United States. Usually this isn’t a problem, but when it comes to the cost of health care the United States is providing us with a very poor comparison. It’s well-known that the Canadian health care system is significantly cheaper than the United States’. Americans spend $8,608 per capita on health care every year, $2,978 more than Canada’s comparatively low $5,630 per capita. This vast cost-differential provides us with a false sense of security that our health care system is delivering good value-for-money. If we broaden our comparison to include other developed countries, however, it’s quite clear that Canada is delivering mediocre value for the amount of money we spend.

Now it’s important to remember that health is a complicated picture and these numbers do not comprehensively compare health outcomes across countries. Nevertheless, looking at spending per capita allows us to begin discussing whether we are getting our money’s worth for our health care dollars. No matter what your political persuasion is, it’s hard to avoid the conclusion that we could be doing a whole lot better.

Consider the United Kingdom, a people and a health care system that share some similarities with Canada. First of all, the UK ranked second out of seven countries in the Commonwealth Fund’s most recent ranking of health care systems, in which Canada ranked sixth. Secondly, if Canada spent the same amount of money per capita as the United Kingdom we would have saved $67 billion in 2011. To put that in perspective, $67 billion was roughly 56% of the federal government personal income tax revenue in 2011-2012.

Admittedly, Canada is about $6,000 richer per capita than the United Kingdom on a purchasing power parity (PPP) basis. It seems unlikely, however, that such a large difference in health care spending between the two countries could be entirely due to income differences. Even if that were the case, however, we could compare ourselves with Ireland. Ireland is richer than Canada PPP-wise, yet only spends $4,542 per person on health care. If Canada were to spend at Irish levels we would still save $35 billion.

No comparison will ever be perfect, but it’s important that we start asking questions about why our system costs as much as it does. Does Canada’s large geography play a factor? Are there large efficiency gains that we’re missing? What are other countries doing better than us? Improving the efficiency and effectiveness of a system as complicated and important as health care is no easy task, but the potential benefits are enormous. None of this can begin, however, until we understand that aggressively examining the best practices of countries that deliver high quality health care at a dramatically lower cost is the best way to improve health care in Canada.